Some middle-income earners will find themselves not having to pay tax as incentives and reliefs announced in the 2016 Malaysia Budget will take them out of the regime.
Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said this was possible with higher tax relief announced such as for children from RM1,000 to RM2,000 per child, relief for having non-working wives (RM4,000), for disabled and school-going children, and for caring for aged parents.
This, he said, would impact the M40 or the middle-income group which represented 40% of the population whose monthly salary bracket is between RM3,800 and RM8,300.
“If all the reliefs are taken in, some in the middle-income group will go out of the tax regime.
“The 2016 Budget, contrary to claims, brings benefits and positive effects to many, whether they are individuals or private sector companies,” he told a media briefing.
On the increase in tax for those in the “super rich” category or “high net worth individuals” to up to 28%, Dr Mohd Irwan said the percentage was still very much lower than some countries which imposed a 40% tax on those in this category.
Under the Budget, those whose annual income registers between RM600,000 and RM1mil will have to pay 26% income tax while those earning more than RM1mil a year will be taxed 28%.
The number of those in the super rich category is relatively small where out of two million taxpayers, only about 5,500 earn more than RM1mil a year.
There are about 15,500 people whose incomes are in the RM600,000 to RM1mil bracket.
“Before the Government decided to impose this, we discussed the matter at length, including with the International Monetary Fund to see how other countries handle taxes for the super rich and we found out that most countries imposed a higher percentage than Malaysia.
“By increasing the tax for those in these two income brackets, the Government is expected to rake in an additional revenue of RM400mil which can be used to supplement aid and relief offered to the middle and low-income earners,” he said.
Source -The Star 29 October 2015